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Don’t Pay Off Your Mortgage – Vancouver Real Estate
I continue to speak to clients who have a primary objective of paying off their mortgage as fast as possible. Many also own their homes free and clear and are sitting on millions of dollars in clear-title equity. I call this “dead equity” because it’s sitting dormant when it could be doing some serious heavy lifting – and generating tens (or even hundreds) of thousands in income every year.
In a market like Vancouver, paying your mortgage makes absolutely zero sense. With mortgage rates as they are, there are far better ways to deploy capital. The wise have been leveraging their equity to buy more assets, writing off the interest, and buying investments that pay them. This could mean building a stock portfolio inside a tax-deferred/tax sheltered account, or investing in a Mortgage Investment Corporation(MIC). Even better, it could be used to purchase investment property.
Eventually interest rates will rise – but only when inflation picks up, and the best hedge against inflation is real estate. This is because land, labour, and materials all increase in an inflationary environment. Inflation hurts you as a consumer – but it helps you as an investor.
Jay Coupar, Realtor
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